All Forum Posts by: Eric Rosiello

Quicker doesn't necessarily mean worse tenant and lower price doesn't necessarily mean better or worse work. Anyways, the point is that basing payment based operating income rather than rent collected might make more sense for both parties. It could be structured so that the PM would do better than the old method when things are going well, but share in the loss when things aren't going as well. More like an equity partner. Like you said, value is the name of the game and I think in order to get that it's best for the investor and PM interests to be aligned in the best way possible. It sounds like a lot of investors have problems, so I think it's worth thinking about a different model.

Definitely agree with everyone on the house hack - ideally a 3 or 4 family. Find one that needs some work and choose an area that can fetch high rents for updated units (i.e. buy the worst house in a nice neighborhood). Take your time on the search and buy something that you know will cash flow very well and has appreciation upside - it is very important to have good numbers and buy right! Most of your value will come from buying at a low price then doing the initial rehab and re-leasing. Doing this right will allow you to reinvest in more properties. If you don't do this well then you won't have the funds to reinvest. Good luck, you are off to a great start having $40k saved up at age 20!

This story sounds all too familiar. I've gone through two property management companies myself with similar experience. At first things were great, but then there was internal turnover and all of a sudden I was working with people I never would have hired in the first place. I found that things wouldn't get done without my handholding, tenants began complaining, and it became not worth it anymore.

I ended up having to move on from both companies and took on the management myself. About 6 months later I got lucky that my agent, who is also an investor, started his own management company and I was able to hire him. He is a superstar in the industry and we think about investing in a very similar way - so things are much easier and better now. I think good property management is super super important and one of the most difficult things to find. 

I have wondered if there is a better model than the typical "X percent of collected rent". I am thinking "X % of operating income" makes more sense. It would motivate the PM to actually shop for the best price on maintenance, repairs, capex, etc and fill vacancies faster. It could be structured where they do much better than the rent collected model when things are going well, but do a lot worse when things aren't - which is more similar to experience of the investor. Thoughts?

Agreed, not directly for the housing market.

Could have clarified with... raising rates slows the economy as whole, of which the housing market is a large part of...

I guess I don't see what's so exciting here. The market was too hot so the Fed starting raising rates to cool things off a bit and that is what is happening. Yes - there are some people who are overleveraged and will fail but I think the majority of people have a decent amount of equity and manageable mortgages. The whole point of raising rates is to flush out the overexuberant actors in the market. 

If we were continuing to see prices skyrocket despite the higher rates I think that would be more concerning and more supportive of a bubble but so far that doesn't seem to be the case. If there is a "crash" in RE I think it would be on the back of a general economic downtown, not like '08 where RE was at the forefront of the recession. In general I think here in the US we are in pretty good shape given the continued global dependence on the dollar and where we stand in terms of energy independence. The Fed also finally has some ammo to lower rates if the economy slows too much.

It's obvious that higher lending costs make buying less attractive now, at least until prices come down in lock step. But that doesn't mean that there aren't opportunities out there. Yes if the market comes off a ton then it would have made sense to suspend buying and wait for lower prices, but that's not an easy thing to time. It's very hard to know the right time to get back in. Like others have said, there have been people on this forum calling for a correction or crash for years and if people suspended buying based on those opinions they would have missed a massive bull run. You could be right Greg, but maybe not. Better off discounting your models a bit than trying to time it perfectly in my opinion.

@Nathan Gesner

I very much enjoyed reading this! I'd be interested in hearing how things are going now that it's been ~9 months if you're willing to share!

I went with @Rob L. at Four Points Property Management. My experience with Rob and 4P has been excellent thus far. Feel free to PM me with any questions!

Eric

@Zach Fetcko

Thanks Zach! I see that on the website now as well.

Eric

Hey All, a lot of good info on this thread and happy to see people have started to receive payments. 

I missed the first round for the EIDL grant. I believe the government approved an additional $60 billion for the program on April 24, however when I go to the website I see they are still not accepting new applicants. 

Wondering if anyone has any color on when they will be accepting new applicants again, or if I'm looking in the wrong place. Below is the website I've been referencing. Any insight would be a huge help! Thanks!

https://www.sba.gov/page/disaster-loan-applications

Thanks everyone. The information and insight here has been very useful. My plan is to hold off on requesting any forebearances for now. I'll hope my tenants can make rent and can use my reserve funds for a month or two if I need to. Once I learn of a tenant that cannot make rent for the month, I'll  apply for forebearance with my mortgage provider for that property.

Eric